The later life living sector is evolving rapidly, driven by demographic shifts, changing consumer expectations and growing investor interest. With opportunity comes complexity. From planning and construction to regulatory compliance, consumer protection, and funding models, the legal framework underpinning later life living is intricate and constantly changing.
This series of articles is designed to demystify some of the legal challenges shaping the later life living market. We’ll explore key issues, providing practical insights to help stakeholders make informed decisions and future-proof their strategies. In our first in this series we look at event fee regulation.
What are event fees?
Event fees, also known as exit fees, transfer fees, or deferred management fees, are charges payable by residents when a specific event occurs, most commonly the sale or transfer of a retirement property. Typically calculated as a percentage of the resale price, these fees help fund communal facilities and services such as restaurants, gyms, and 24-hour support.
For many residents who are asset-rich but income-poor, event fees allow them to defer part of the cost of living in well-equipped and modern, integrated later life living communities until they leave the property.
Historically, event fees attracted criticism because they may not have been clearly disclosed, sometimes leaving residents (and their families) surprised at the point of sale, particularly as the amounts due on resale could be significant.
Until recently, while widely used in the later life living sector schemes, there was no statutory definition of event fees and no consumer protection for residents.
In its report on its review of the event fee model in 2017, the Law Commission recommended a code of practice rather than abolition, acknowledging that event fees help maintain affordability and fund high-quality facilities.
What’s changing under the new legislation?
The Leasehold and Freehold Reform Bill 2024 came into force in May 2024, with phased implementation and further consultation to continue into 2026. Key changes include:
- Legal definition of event fees as charges payable on granting, assigning, or terminating a lease, calculated by a method determinable in advance.
- Classification of event fees as fixed service charges.
- Regulation requiring mandatory disclosure and a likely statutory code of practice based on Law Commission recommendations.
The government hopes these changes will improve transparency, prevent hidden charges and boost consumer confidence whilst continuing to encourage investment in retirement housing.
Implications for developers, operators, and landlords
The changes will have significant operational and compliance implications for those involved in the later life living sector. This will include:
- Mandatory disclosure: Stricter requirements for upfront disclosure in marketing materials, contracts, and sales processes with non-compliance potentially leading to enforcement action and reputational damage.
- Standardisation and transparency: Operators may need to revise lease precedents and marketing documentation to ensure compliance.
- Consumer Code of Practice: Expected minimum standards for timing and format of fee disclosure with caps or limits on certain charges, along with guidance on fair presentation of financial consequences.
- Financial modelling: Developers, operators and landlords should review business models reliant on event fees.
- Investor confidence: Clear regulation is expected to increase confidence among institutional investors, unlocking growth in integrated retirement communities.
Staff and agents will need to be trained on these new compliance obligations to avoid mis-selling risks.
The introduction of clear regulation and the advent of a statutory code of practice for event fees marks a pivotal moment for the later life living sector. By prioritising transparency, standardisation, and consumer protection, the new framework not only safeguards residents but also strengthens the reputation and sustainability of later life living communities. Developers, operators, and landlords who embrace these changes will be well-positioned to attract investment, and deliver high-quality living environments. Ultimately, these reforms will encourage a more resilient sector that inspires greater confidence and the continued growth of integrated later life living.
